The effect of China's pilot carbon emissions trading schemes on poverty alleviation: A quasi-natural experiment approach

Abstract

As an important new tool for ecological poverty alleviation, carbon trading compensation is combining ecological protection with rural poverty alleviation. This paper evaluates the poverty alleviation impact of China's pilot carbon emissions trading schemes (ETS) at the provincial level before and after the program, which was implemented from 2007 to 2017. Specifically, we measure poverty alleviation in terms of rural residential income growth and rural job creation. By exploiting the quasi-experimental variation in whether provinces were affected by this pilot ETS policy, our analysis finds that the ETS policy resulted in increases in rural residential income and employment. We find the estimated effects correspond to an increase of approximately 752.6 yuan in annual rural residential income and 2.35% in the ratio of rural employed population to the total employed population, accounting for 9.5% of the rural residents' income and 7.11% of the rural employment, specifically. The results imply that the implementation of ETS is beneficial to income growth and job creation for rural areas of China, which mean the ETS policy may be conducive to poverty alleviation in affected provinces.

Keywords: Carbon emissions trading; China; Difference-in-Differences; Poverty alleviation.